Bank of America Corporation we know today) introduced its first credit card, the Beneficiary in Fresno, CA. (See Ex. The Beneficiary was revolutionary in that it was the first consumer card to be accepted universally. It Is informally known as the first credit card for the average American. Ex. 1: The early Beneficiary It is often said that credit and the credit card helped elevate many Americans into the Middle Class. Ironically it can also be said that credit is the root cause of our economic problems today. Credit is an important part of many different economies.
Credit has always played a central role in the American economy. Visa, however, played the key role in this critical Juncture of American history.No other bank or credit card company successfully issued a nationally accepted all-purpose credit card before Bank of America. Initially Bank of America issued test runs in Fresno, CA only.
Shortly after word spread around and competitors attempted to issue their version of consumer credit cards In the same markets. Bank of America’s engineer reaction was Issuing almost 2 million cards throughout several major cycles In California. As a result of their rushed launch, Bank of America was at a loss and approximately 22% of their accounts were delinquent.Yet aside from the startup disaster and being in he red, Bank of America had cemented its place in history of credit cards prompting other companies and banks to get into the consumer credit card business. The plastic revolution had begun.
Not surprisingly, Visa would continue to set records through its ingenuity and growth. Mastered, the first major competitor to Visa, was comprised of a network of banks that were concerned about the growth and the monopoly of the Beneficiary. Soon these two associations dominated the market and were expanding internationally.
The key to securing the credit card market was uniformity In processing transactions. This required Bank of America to solicit banks to Join In Its network through Issued licensing. By the sass’s Bank of America relinquished control of credit card operations to the National Bankrolled Inc. (BIN), a separate entity of member banks who had been handling Bank of America’s credit card operations. Attempting to secure growth in international markets, BIN change a Its name to Vela In ( e Ex 2) Nine name was change In a seclusion to leave out the name “America” in favor of a name that “implied no national identification. (SST. James Press, 1999, 9th Para. ) Ex.
2: The Changes in the VISA logo. Over the last century, the standard of living for the average American has changed rapidly for the better. Before the Industrial Revolution, most of people’s time was spent tending to necessities of life. After the Industrial Revolution, people had a bit more time to spare than the previous generations. Technology has also played a big part in improving our daily lives. Items like the radio, irons, refrigerators, washing machines and dryers, television sets, and cars all quickly became parts of our daily lives.America’s willingness to use credit to purchase these items increased also. Americans viewed the use of credit to purchase these “essential” items as acceptable.
But what was considered “essential” changed from generation to generation and even from decade to decade. Traditionally, the same companies that extended credit were the same companies that were selling you the product. Credit stemmed from barter, verbal commitments, general good faith or some other form of direct exchange.Later companies extended installment plans and layaway plans leading up to traditional credit. Since the sass’s Americas use of revolving credit rose exponentially. See Ex. 3) Financial innovations and easier access to credit is largely seen as a major stepping stone in elevating economic standards of average Americans. Ex.
3: Revolving Credit Use in the US. During the sass’s, it became priority for Visa and other card companies to master the transaction process. First credit card companies had to convince retail businesses.When retail stores realized that they did not have to get rid of their store retail credit cards they already had and accepting all-purpose credit cards would increase spending in their stores, they were an easy sale.
Second, technology made the transaction process much more practical and efficient. Companies have a variety of reasons why they may want to go public. Going public helps a company raise funds, it maximizes the company’s shareholder value, and it increases company awareness. Going public also comes with downfalls.
The process is expensive.Companies can expect to pay anywhere from $250,000 to $1 million even if the offering does not get completed I en process Is very time consuming Tort everyone especially executives. Once public, there is constant pressure to increase earnings. Also, public companies are under strict compliance laws under SEC regulations and Serbians Solely.
These problems and more can be a heavy burden for a newly growing company. There was a renewed interest for companies to go public during the mid to late sass’s under the economic boom of the “Reagan Revolution. This slowed down during the recession of 1987 and then there was a boom again for most of the sass’s during the Clinton Era. The Dot com bust of the sass’s, the September 1 lath attacks in 2001, and then an economic collapse again from 2008-2010 brought a slow halt to Wall Street ND PIP fillings. (See Ex.
4) Ex. 4: PIP Filings last 40 years Ex. 4: PIP Filings last 40 years Visa was not phased by the economic turmoil and instead went forward with its public offering.
In 2008, Visa’s PIP was, and is to date, the largest PIP ever raking in $17. Billion. Visa is traded under the ticker symbol on the New York Stock Exchange. Initially, it submitted its PIP filing estimating approximately $10 billion with its share price at $37 – $42. On its PIP opening day, March 19, 2008, its shares were valued at $44 per share. Visa issued 406 million shares. Underwriters JP Morgan and Goldman Cash were two broker firms among the total 41 underwriters who exercised their option to issue 40 million more shares. The actual total raised by Visa was somewhere around 19.
1 billion.The first form that companies file when they are planning to go public is the S-l form or the Registration Statement. It contains the basic business and financial information of the company. It includes a business summary, a financial summary, company strengths and opportunities, weaknesses and risk factors, management and compensation, the stock offering, and the intended SE AT ten proceeds. Visa’s 5-1 also Alehouses Its market opportunities.
Presently Visa owns the largest market share of its industry compared to its competitors Mastered, Discover, American Express, and Diner’s Club.Visa’s competitive strength makes it the leading global brand in payment processing and a leader in innovation. Visa’s Registration Statement gives details about their strategy and explains the business reorganization. Before Visa went public they restructured their company incorporating separate Visa associations around the world. Visa Canada, Visa USA, Visa International (which covered Asia, Latin America and the Caribbean, Central and Eastern Europe, the Middle East, and Africa), and Innovation Joined under the banner of Visa, Inc.Visa and other large payment processing companies worry most about regulatory scrutiny and legal proceedings seeking damages. The Risk Factors disclose the possible adverse outcomes of future trends to any potential investors.
After the Russian descent into Ukraine and the annexation of Crimea, the US imposed sanctions on Russia. Part of those sanctions was the requirement of the Credit Card giants to stop processing transactions in Russia. After this move, Russian’s Vladimir Putting struck back issuing a law forbidding foreign payment systems from cutting off services.In addition he is requiring a $3. 8 billion deposit for Visa and Mastered as collateral from reneging on this agreement. As international companies, Visa and Mastered have gotten tangled up in political and economic conflict between the countries.
Other concerns are operational breakdowns and general competitive economic factors. There are ongoing charges and complaints against Visa and other financial institutions called “interchange litigation. There is the possibility that Visa Inc. May not win in its defense in these cases causing substantial losses.The registration statement details their stock offering. Companies sometimes issue different classes of stock to assign more voting rights to a higher class of stock. Visa issued different class stock; class A, B, and C, giving covering investors in different geographic regions.
Its dividend policy and capitalization is detailed in the use of proceeds section. In Visa’s financial statements they indicate that they contain “Forward Looking Statements. ” Forward looking statements are specifically for investors and are not GAP approved. Forward looking statements help forecast and estimate potential growth.Visa has had steady net income increasing every year.
Except for a short decline a year after going public, Visa’s stock has seen steady growth. After launching with an open day share price of $44 per share and rising to a high of $98 that year, Visa’s stock dropped back down to $44 in early 2009. But it did not stay there for long increasing to its highest of $232 in January of 2014. Today it’s averaging at $210.
(See Ex. 5) Visa was very successful at raising capital. Ex. 5: Visa Share Price Chart Vela’s Dustless model NAS Kept ten company stressful Detour Its restructuring Ana after.
Its business model is designed to benefit everyone involved; customers, vendors, banks, and card issuers. Their profit margin is 44% and their operating margin is 62%. Visa also has a very low debt to equity ratio of around 35%. For the month of April 2014 from Visa’s quarterly IQ, its total liabilities were $9.
968 billion and its total shareholder equity was $27. 295 billion for a debt equity ratio of 36. 52%. The numbers from Visa’s 2013 annual ASK are similar at 33. 81%. Investors looking to invest with Visa would find a stable investment for long term investment.